Update:
Tape Machine is the app to get. mp3 (and you can select the bitrate you want at any time) and WAV output. Plus some Audacity-like editing! Awesome! $4.00 at the market. There's a "lite" free version too, which has all the power and features of the full version but will only record or playback a one-minute (max) file!!! so the lite is designed to frustrate and make you buy the "full" rather than being moderately useful in and of itself.

I also see J4T Multitrack Recorder on the market which gets 3.5 rating.

TapeMachine does exactly what I want it to. In my dreams the SGP would have stereo mic inputs and I'd be able to do some real field recording with this.